European Parliament legislative resolution of 25 September 2008 on the proposal for a Council directive amending Directive 2006/112/EC on the common system of value added tax, as regards the treatment of insurance and financial services (COM(2007)0747 – C6-0473/2007 – 2007/0267(CNS))

(Consultation procedure)

The European Parliament
,

– having regard to the Commission proposal to the Council (COM(2007)0747),

– having regard to Article 93 of the EC Treaty, pursuant to which the Council consulted Parliament (C6-0473/2007),

– having regard to Rule 51 of its Rules of Procedure,

– having regard to the report of the Committee on Economic and Monetary Affairs (A6-0344/2008),

1. Approves the Commission proposal as amended;

2. Calls on the Commission to alter its proposal accordingly, pursuant to Article 250(2) of the EC Treaty;

3. Calls on the Council to notify Parliament if it intends to depart from the text approved by Parliament;

4. Asks the Council to consult Parliament again if it intends to amend the Commission proposal substantially;

5. Instructs its President to forward its position to the Council and the Commission.

Text proposed by the Commission

Amendment

Amendment 1Proposal for a directive – amending actRecital 1

(1) The financial service industry makes an important contribution to growth, competitiveness and job creation but can fulfil its role only under neutral conditions of competition in an internal market. It is necessary to provide a framework which provides legal certainty as
to the value added tax (VAT) treatment of financial products and their marketing and management.

(1) The financial service industry makes an important contribution to growth, competitiveness and job creation but can fulfil its role only under neutral conditions of competition in an internal market. It is necessary to provide a framework which provides such neutral conditions in regard
to the value added tax (VAT) treatment of financial products and their marketing and management.

Amendment2Proposal for a directive – amending actRecital 2

(2) The existing rules governing the exemptions from VAT for financial and insurance services laid down in Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax are out of date and have led to uneven interpretation and application. The complexity of the rules and the variation in administrative practices generates legal uncertainty for economic operators and tax authorities. This uncertainty has led to considerable litigation and has increased the administrative burden. It is therefore necessary to clarify which insurance and financial services are exempt and thereby create greater legal certainty and reduce the administrative burden for operators and authorities.

(2) The existing rules governing the exemptions from VAT for financial and insurance services laid down in Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax are out of date and have led to uneven interpretation and application. The complexity of the rules and the variation in administrative practices generates legal uncertainty for economic operators and tax authorities and fails to secure a level playing field in the EU
. This uncertainty has led to considerable litigation and has increased the administrative burden. It is therefore necessary to clarify which insurance and financial services are exempt and thereby create greater legal certainty and a level playing field in the EU
and reduce the administrative burden for operators and authorities.

Amendment 3Proposal for a directive – amending actRecital 5

(5) Insurance services and financial services require similar forms of intermediation. It is therefore appropriate for intermediation in insurance and intermediation in financial services to be treated in the same way.

(5) Insurance services and financial services require similar forms of intermediation. It is therefore appropriate for intermediation in insurance and intermediation in financial services to be treated in the same way, including intermediation by an agent who has neither a contractual relationship nor any other direct contact with any of the parties to an insurance or financial transaction to whose conclusion the agent has contributed. In such cases the tax exemption should uniformly cover all activities that are typical of an insurance or financial services agent, including all activities preparatory and subsequent to concluding a contract
.

Amendment 4Proposal for a directive – amending actRecital 5 a (new)

(5a)It is appropriate for activities constituting management of investment funds to continue to fall within the exemption if carried out by third-party economic operators.

Amendment 5Proposal for a directive – amending actRecital 7

(7) Suppliers of insurance and financial services are increasingly able to allocate input VAT on costs incurred by them precisely to the output to be taxed. Where the services they supply are fee-based, they can establish the taxable amount for these services easily. It is therefore appropriate to extend the possibility to opt for taxation for such operators.

(7) Suppliers of insurance and financial services are increasingly able to allocate input VAT on costs incurred by them precisely to the output to be taxed. Where the services they supply are fee-based, they can establish the taxable amount for these services easily. It is therefore appropriate to extend the possibility to opt for taxation for such operators, preventing any double taxation concerns that may arise by coordinating such taxation with national taxes on insurance and financial services
.

Amendment 6Proposal for a directive – amending actRecital 8 a (new)

(8a)In adopting measures under Directive 2006/112/EC governing the right of option for taxation, the Council should ensure the uniform application of such rules in the internal market. Pending the adoption of such rules by the Council, Member States should be able to lay down the detailed rules governing the exercise of the option. Member States should notify the Commission of draft measures in this regard six months before their adoption. During that period, the Commission should assess the draft measures and issue a recommendation.

1a. The exemption provided for in points (a) to (e)
of paragraph 1 shall apply to the supply of any constituent element of an insurance or financial service, which constitutes a distinct whole and has the specific and essential character of the exempt service.

1a. The exemption provided for in points (a) to (f)
of paragraph 1 shall apply to the supply of any constituent element of an insurance or financial service, which constitutes a distinct whole and has the specific and essential character of the exempt service.

(1) 'insurance and reinsurance
' means a commitment whereby a person is
obliged, in return for a payment, to provide another person
, in the event of materialisation of a risk, with an indemnity or a benefit as determined by the commitment;

(1) 'insurance' means a commitment whereby one or more persons is or are
obliged, in return for a payment, to provide one or more other persons
, in the event of materialisation of a risk, with an indemnity or a benefit as determined by the commitment;

(8) 'supply of
securities' means the supply
of tradable instruments other than an instrument establishing title to goods or to the rights referred to in Article 15(2), representing financial value and reflecting any one or more of the following:

(8) 'transactions concerning trading in
securities' means the sale
of tradable instruments other than an instrument establishing title to goods or to the rights referred to in Article 15(2), representing financial value and reflecting any one or more of the following:

(c) unit ownership in undertakings for collective investment in the securities referred to in points (a) or (b), in other exempted financial instruments referred to in points (a) to (d) of Article 135(1) or
in other undertakings for collective investment;

(c) unit ownership in investment funds, as defined in point 10, or in
undertakings for collective investment in other undertakings for collective investment;

(9) 'intermediation in insurance and financial transactions' means the supply of services rendered to, and remunerated by, a contractual party
as a distinct act of mediation in relation to the insurance or financial transactions referred to in points (a) to (e) of Article 135(1), by athird partyintermediary
;

(9) 'intermediation in insurance and financial transactions' means the supply of services rendered as a distinct, direct or indirect
act of mediation in relation to the insurance or financial transactions referred to in points (a) to (e) of Article 135(1), by third-partyintermediaries, provided that none of the intermediaries is a counterparty to those insurance or financial transactions
;

(10) 'investment funds' means undertakings for collective investment in the exempted financial instruments referred to in points (a) to (e) of Article 135(1) and in real estate
;

(10) 'investment funds' means specially constituted investment vehicles created for the sole purpose of gathering assets from investors and investing those assets in a diversified pool of assets, including pension funds and vehicles used to implement and execute collective pension schemes
;

(11) 'management of investment funds' means activities aimed at realising the investment objectives of the investment fund concerned and shall include at least strategic and tactical asset management and asset allocation, including advisory services, as well as currency and risk management
.

1. From 1 January 2012, Member States shall allow taxable persons a right of option for taxation in respect of the services referred to in points (a) to (g)
of Article 135(1).

1. From 1 January 2012, Member States shall allow taxable persons in each individual case
a right of option for taxation in respect of one
of the services referred to in points (a) to (ga)
of Article 135(1), where that service is provided to another taxable person established in the same Member State or elsewhere in the Community
.

1a.The Commission shall report to the European Parliament and the Council on the operation of the right of option under paragraph 1 by ...*. If appropriate, the Commission shall present a legislative proposal concerning detailed rules governing the exercise of that right of option and any other amendments of this Directive in this regard
.

_______________________* Three years after the entry into force of Directive .../.../EC.

2. The Council shall adopt the measures necessary for the implementation of paragraph 1 pursuant to the procedure provided for in Article 397. So long as the Council has not adopted such measures, Member States may lay down
the detailed rules governing exercise of the option under paragraph 1.

2. The Council shall adopt the measures necessary for the implementation of paragraph 1 pursuant to the procedure provided for in Article 397. So long as the Council has not adopted such measures, Member States may maintain
the existing
detailed rules governing exercise of the option under paragraph 1.

(5) the group claims from its members only the exact reimbursement of their share of the joint expenses, excluding any
transfer-pricing adjustments made for the purposes of direct taxation.

(5) the group claims from its members only the exact reimbursement of their share of the joint expenses;
transfer-pricing adjustments made for the purposes of direct taxation shall not affect the group's exemption from turnover tax
.

'(c) transactions which are exempt pursuant to points (a) to (ga) of Article 135(1), where the customer is established outside the Community or where those transactions relate directly to goods to be exported out of the Community.'

1. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by 31 December 2009 at the latest
. They shall forthwith communicate to the Commission the text of those provisions and correlation table between those provisions and Directive.

1. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive while ensuring that end-consumers benefit from the restructuring of the present VAT arrangement
. They shall forthwith communicate to the Commission the text of those provisions and correlation table between those provisions and Directive.